USD/JPY in search of a firm direction, flat-lined above 106.00 mark
- USD/JPY struggled to capitalize on the previous day’s goodish bounce from one-week lows.
- A softer risk tone benefitted the safe-haven JPY and kept a lid on any meaningful upside.
- The prevalent USD selling bias further undermined the sentiment surrounding the major.
The USD/JPY pair seesawed between tepid gains/minor losses through the mid-European session and was last seen trading in the neutral territory, just above the 106.00 mark.
A combination of negative forces failed to provide any meaningful impetus or assist the pair to capitalize on the previous day's modest bounce of around 45 pips from over one-week low level of 105.79. A fresh leg down in the US equity futures benefitted the Japanese yen's perceived safe-haven status and capped the upside.
On the other hand, the US dollar remained depressed some follow-through uptick in the shared currency. The overnight report that ECB will adopt a more optimistic tone on its economic outlook continued underpinning the euro. Hence, the key focus will be on the ECB policy decision, scheduled to announce in a short while from now.
The ECB announcement and the post-meeting press conference will infuse some volatility across the FX market and influence the USD price dynamics. This, coupled with the release of the US Initial Weekly Jobless Claims and the broader market risk sentiment, will be looked upon to grab some meaningful trading opportunities.
Meanwhile, the downside remained limited and the pair, so far, has managed to hold above the 100-period SMA on the 4-hourly chart. Moreover, the USD/JPY pair has been oscillating between two-converging trend-lines over the past four weeks or so, forming a symmetrical triangle and warranting some caution before placing fresh directional bets.
Technical levels to watch